A new tool published by the Cornell Center for Hospitality Research (CHR) helps restaurant operators calculate the likely monetary outcomes of offering off-peak specials. The tool and its accompanying explanation, “Instructions for the Early Bird & Night Owl Evaluation Tool (EBNOET) v2015,” were developed by Gary M. Thompson, a professor at the School of Hotel Administration. Both documents are available at no charge from the CHR.
“I wanted to provide restaurant owners with a better estimate of the revenue effects of early bird and night owl specials,” said Thompson. “The typical back-of-envelope calculation can easily include the effects of cannibalizing regular sales that occurs when people who were going to eat anyway take the special instead. But what is hard to capture in such calculations is the capacity cannibalization that occurs, that is, the seats being occupied, which further reduces the number of full-fare customers served. I also include a way to calculate near-optimum table occupancy.”
The restaurant tool is based on user inputs into an Excel file. The tool also considers the revenue from new customers attracted by the early bird or night owl promotions, as well as the level of increased business needed to achieve the net monetary value target for the promotion.